TLDR
- Trump paused tariffs on Canada and Mexico, leading to a sharp recovery in crypto markets after an initial crash that wiped out $10 billion in market cap
- Ethereum plunged to $2,135 before rebounding to $2,881, with over $600 million in futures positions liquidated
- Solana showed resilience, climbing 13.5% to $216 after hitting a low of $190
- World Liberty Finance, backed by the Trump family, made transfers totaling $60 million to Coinbase Prime
- Both Canada and Mexico agreed to strengthen border security measures as part of the tariff pause agreements
President Donald Trump’s decision to pause tariffs on Canada and Mexico triggered a swift recovery in cryptocurrency markets, following a weekend crash that had erased $10 billion in market value. The rebound came after both North American nations agreed to enhance their border security measures.
The crypto market’s initial downturn began when Trump announced potential tariffs against America’s largest trading partners. Bitcoin dropped from nearly $105,000 to $92,000, while Ethereum experienced an 18% crash, falling to $2,135 during Asian trading hours.
The crash marked Ethereum’s steepest single-day decline since May 2021. The sharp downturn led to over $600 million in Ethereum futures positions being liquidated, contributing to a total of $2.2 billion in crypto derivatives liquidations across the market.
Solana demonstrated stronger recovery potential, climbing 13.5% to $216 from its intraday low of $190. Trading volume for SOL increased by 27% during the day, according to GeckoTerminal data, highlighting growing interest in the platform’s meme-coin trading and decentralized finance sectors.
The market started to turn around after Mexico reached an agreement with the United States. Mexican President Claudia Sheinbaum announced plans to deploy 10,000 soldiers to the US border to combat illegal drug trafficking and unauthorized immigration.
Following Mexico’s lead, Canadian Prime Minister Justin Trudeau negotiated a similar pause on tariffs for at least 30 days. Canada’s agreement included a $1.3 billion border plan to increase personnel and equipment. The country also considered creating a “Fentanyl Czar” and classifying cartels as terrorist organizations.
Eric Trump’s social media activity appeared to influence market sentiment. He posted on X about Ethereum, stating “In my opinion, it’s a great time to add ETH.” The post’s editing history revealed he had removed a second sentence that read “You can thank me later.”
In my opinion, it’s a great time to add $ETH.
— Eric Trump (@EricTrump) February 3, 2025
World Liberty Finance, a decentralized finance project backed by the Trump family, made notable moves during the market recovery. The project’s Gnosis Safe Proxy executed multiple transfers totaling approximately $60 million, with $55.69 million in Ethereum and $5 million in USDC, primarily directed to Coinbase Prime deposits.
Analysts at Bernstein characterized the recent sell-off as normal market behavior. They noted that crypto assets face short-term risks due to their correlation with risk-on assets and the potential impact of tariffs on living costs and dollar strength.
The proposed tariffs, if implemented, would increase prices for U.S. consumers on various goods, including gas, produce, beer, tequila, and new cars manufactured within North American supply chains. Products from China would also become more expensive.
House Democratic Leader Hakeem Jeffries criticized the tariff strategy, calling it “a Republican rip-off” that would increase basic goods prices and harm the general public. Some economists argue that tariff costs are typically passed on to American consumers rather than being absorbed by foreign producers or governments.
The market recovery highlighted the interconnected nature of cryptocurrency markets and global trade policies. Bitcoin returned to trade above $100,000, reaching $101,731 after its earlier decline to $92,000. Ethereum stabilized around $2,880 after touching its low of $2,451.
Min Jung, an analyst at Presto Research, noted that strong performers like SOL and XRP led the recovery, while AI-related tokens rebounded from being among the worst performers during the crash. The pause on tariffs provided additional support for SOL’s price movement.
Ben Zhou, CEO of Bybit, suggested that the total liquidation figures might be underreported due to limitations in exchange API data. The full extent of the market impact could be larger than initially calculated.
The most recent blockchain data shows World Liberty Finance’s largest single transfer was worth $28 million, according to the Arkham tracking platform.
